The real issue which keeps investors away from Italy and Spain is the current level of government yields, according to Ed Lalanne, European strategist at US-based Macro Risk Advisors.

“I don’t think that we are on a road to resolve our problems. The spread of Spain and Italy yields over Germany has been a big worry for investors over the last weeks,” he told Investment Europe.

The speech of Mario Draghi, chairman at the European Central Bank, who during a press conference on August 2 suggested that the central bank is ready to restart to buy securities, has reassured markets in the short-term.

Short-dated Spanish and Italian yields fell again today, on the back of expectations of European Central Bank intervention, even though any bond-buying would be subject to Spain and Italy request for eurozone rescue funds.

Ten-year Spanish yields fell to 6.48% today, while Italian 10-year yields were up at 5.82 percent.

“We are still on the wake of Draghi’s speech, but the plan of the ECB is not specific enough. The real issue is that when yields will increase again, a new group of investors will leave the country,” Lalanne warned.

The scenario is particularly true for US investors, somehow insulated from the exposure to the eurozone compared to the UK and other markets.

The outlook remains challenging for both Italy and Spain.

“Despite expectations for GDP to contract from +0.4% in 2011 to -1.4% in 2012, Italy’s primary budget balance is expected to improve from 1% to 3.4% of GDP. Growth worsens 2%, but the budget improves 2.4%. Where are the Italians finding the money?” the economist asked.

Meanwhile, Spain’s €100bn bailout request could not be sufficient to recapitalise the country’s banks.

“Again, the function is of government’s bond yields. They are at manageable level now, but there is no mechanism in place to stop them from rising again,” Lalanne said.